Regulatory Affairs: Inpatient-Only List Will Be Phased Out

OMS's Outpatient Prospective Payment System and Ambulatory Surgical Center final rule, which took effect on Jan. 1, substantially blurs the lines between inpatient and outpatient surgical care, as well as the artificial delineation separating ASCs from HOPDs. CMS had historically maintained a payment and regulatory distinction between procedures performed on Medicare beneficiaries in various settings. These locations were — and remain — artificially divided into separate sites of service: inpatient, HOPDs and ASCs.

CMS has addressed this longstanding distinction by making two major changes to these artificial barriers: The inpatient-only procedure list will be gradually eliminated, and most procedures formerly on the HOPD-only list are now approved for coverage in ASCs.

In the first of these two positive developments, CMS confirmed its intention to phase out the inpatient-only procedure list over the next three years. CMS initiated the implementation of this process on Jan. 1 by removing 298 procedures, the majority of which are related to musculoskeletal services. By 2024, the full list of approximately 1,700 procedures will be completely removed and approved for payment in hospital-based outpatient settings when clinically appropriate.

In the second pronouncement, CMS essentially eliminated most of the discrepancies separating HOPDs and ASCs by placing 267 formally HOPD-only procedures on the ASC list of covered procedures for 2021. The addition of total hip replacements stands out.

Despite the obvious clinical similarities between HOPDs and ASCs, surgery centers have long been prohibited from offering identical services to Medicare beneficiaries. Each year, the ASC industry would historically declare small victories when CMS added a limited amount of procedures to the list of surgeries payable in ASCs that had previously been reimbursed only in HOPDs. (Last year, the big gains were six cardiac interventional procedures and total knees.)

CMS did not apply the rationale underlying the elimination of the inpatient-only list to completely and finally eliminate the artificial distinction between HOPD and ASC covered procedures. The two separate outpatient sites of service are therefore currently scheduled to persist for the foreseeable future. The 2021 final rule also declares that procedures on the inpatient-only list as of 2020 would be proscribed from future inclusion on the list of ASC-covered procedures. This is puzzling, particularly in light of the positive regulatory developments that facilitate appropriate clinical decision-making by trained medical professionals. The ASC community is gathering forces now to determine the intention of this portion of the final rule.

In announcing the new rule, CMS said leveling the playing field between the various sites of service will result in more cost-effective care. CMS Administrator Seema Verma has often said surgeries can be performed for less money at HOPDs or ASCs. Ms. Verma also notes that non-COVID-19 patients who don't want to have elective procedures performed at an acute care facility can choose to undergo surgery in a more specialized, and less exposure-prone environment.

I agree — but think abolishing the inpatient-only list makes sense for a more fundamental reason: Healthcare providers and their patients should make site-of-service determinations, not payers. And, as surgical care evolves, physicians and patients have become increasingly aware that ASCs are able to safely perform a growing number of increasingly complex surgeries that would have been unthinkable in any setting a decade ago.

CMS has historically perpetuated distinctions between procedures performed in hospitals, HOPDs and ASCs. Finally, the walls they created to institutionalize and enforce the separations appear to be in the process of being dismantled. It shouldn't matter where a procedure is done, especially if it's done safely, but it's always mattered to CMS — until now. With the recent changes to the payment system, ASCs and HOPDs can now get paid to perform procedures that, clinically, they have been able to do safely and effectively for a long time.

Although opinions differ about the complete elimination of the inpatient-only list, erasing the line between CMS's seemingly arbitrary decisions to pay for procedures performed in HOPDs and declining to do so for identical procedures done at ASCs is much less a matter of dispute. As such, the additions of total knees last year and now total hips to the ASC-approved list are clear victories. The federal government will expend fewer taxpayer dollars, and its Medicare beneficiaries gain the option to be treated in facilities that have track records of providing high-quality care that results in excellent outcomes and high levels of patient satisfaction.

The addition of more procedures to the ASC-approved list, and the equally significant eventual elimination of the inpatient-only list, represent a long overdue departure from Washington bureaucrats deciding from afar where a given individual's surgical care should take place. It's an acknowledgment that trained, experienced and qualified physicians and their teams — in concert with patients participating in their own care — are much better positioned to make these clinical determinations. In the final rule, CMS has taken a bold step away from the past and into the future, and Medicare beneficiaries receiving care in any setting will be well served by its actions for a long time to come. OSM